Crown Minerals Act Law Changes

Find out about changes to the Crown Minerals Act and its regulations.

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Crown Minerals (Decommissioning and Other Matters) Amendment Act 2021

This Act came into force on 2 December 2021.

Most of the new requirements in this Act aim to strengthen the petroleum sector’s responsibility for decommissioning of petroleum infrastructure and wells.

Decommissioning usually happens at the end of life of a petroleum permit or licence. It is the process of taking petroleum infrastructure and wells out of service. This may include removing the infrastructure, plugging and abandoning wells and doing site restoration activities.

The Act also made changes that apply to the minerals sector too.

Some of the changes are summarised below.

For further information you can read the Act on the New Zealand Legislation website.

Decommissioning requirements

  • The Act introduced a legal requirement on all petroleum exploration and mining permit and licence holders, to carry out decommissioning activities according to all relevant laws and standards. If those requirements do not exist, they must ensure all wells are plugged and abandoned, and infrastructure is completely removed.
  • It requires petroleum exploration and mining permit and licence holders to meet the full financial costs of decommissioning activities, even if they transfer out of a permit (in the event that the new permit holder fails to carry out and fund decommissioning).
  • It sets out timeframes for decommissioning.
  • It introduced new record and reporting requirements relating to decommissioning such as decommissioning plans, decommissioning cost estimates, financial information, asset registers and a decommissioning completion report. The requirements for this information will be detailed in regulations expected to come into force in late 2022.
  • It introduced the ability to exempt or defer petroleum exploration and mining permit and licence holders from carrying out a decommissioning obligation in respect of a specific well or item of petroleum infrastructure or a class of well or petroleum infrastructure.
  • It introduced the ability for the Minister to carry out a financial capability assessment at any point in time to assess the permit or licence holder’s capability to carry out decommissioning obligations.
  • It requires permit and licence holders to have and maintain one or more financial securities that may be accessed if they fail to carry out or fund decommissioning. It allows the Minister to set the amount and type of financial security required. This is to to minimise the risk of decommissioning liabilities being transferred to the Crown or third parties or both.
  • It introduces new financial penalties and criminal sanctions for not decommissioning petroleum infrastructure and wells.
  • It requires petroleum exploration and mining permit and licence holders to either make a payment, or obtain and maintain a financial security, to meet the costs of any post-decommissioning work, as directed by the Minister. Post-decommissioning work could include activities carried out to the remediation of wells that have been plugged and abandoned, or any infrastructure left in place after decommissioning has been completed.

New enforcement tools

The Act gave us new enforcement tools to improve compliance and respond to non-compliance. These new tools can be used on offences that take place on, or after 1 December 2021.  The new tools apply to  petroleum and minerals permits.

They include:

  • Compliance notices: A notice that we can give a person if we believe, on reasonable grounds, that they are breaching the requirements of the Act. The notice will say what the breach is and a time when it will need to be remedied.
  • Enforceable undertakings: An agreement not to prosecute if the party breaching the Act agrees to meet certain conditions or take action to fix the problem.
  • Infringement notices: Instant fees for non-compliance with certain requirements. These can’t be used until regulations defining the infringement offences are made. This is likely to be in 2023.

Changes to the tests used when someone acquires a permit

The Act changed the test used by us when:

  • someone applies for a new permit
  • if there is a change of operator
  • someone transfers their interest in a permit
  • a change of control for a Tier 1 permit operator is consented. 

It requires us to be satisfied that a proposed permit holder will be highly likely (instead of ‘likely’) to comply with work programmes, permit conditions, health and safety requirements, environmental requirements and obligations relating to fees and royalties (as appropriate).

This change is intended to reduce the chance of people getting a permit if they:

  • don't have the right technical or financial capability, or
  • have a poor history of compliance.

Other amendments made in the Act

Other changes, include:

  • clarifying the type of records and reports expected to be kept by permit and licence holders
  • enabling the proactive release of reports once the relevant non-disclosure periods have passed
  • removing the need for annual reassessments by us of the tier status of mineral permits
  • reclassifying all minerals prospecting permits as Tier 2 permits.

Crown Minerals (Petroleum) Amendment Regulations

These regulations are in development and are expected to come into force in 2023.

They will support the changes introduced in the Crown Minerals (Decommissioning and Other Matters) Amendment Act 2021.

They will set out detailed technical and financial information requirements related to decommissioning.

For example, they will detail what information and when it will be required for:

  • field development plans
  • asset registers
  • decommissioning plans, cost estimates and completion reports
  • financial information.
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